Social Security Statements Now Available Online

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Up until last year, Social Security would send taxpayers an annual personalized statement showing a complete record of their taxable earnings as well as estimated retirement, disability and survivor benefits based on those earnings. Unfortunately, budget constraints brought on by the recession put an end to those yearly mailings.

But thereâ€™s good news: Social Security has resumed mailing paper statements to workers 60 and older who aren’t already receiving benefits. And, they recently launched a new Social Security Statement tool that allows you to access the same information online.

Estimate the retirement, disability and survivor benefits available to you under different work, earnings and retirement age scenarios.

Estimate benefits for which your family would be eligible when you receive Social Security or die.

View a list of your lifetime earnings to date, according to Social Securityâ€™s records.

See the estimated Social Security and Medicare taxes youâ€™ve paid over your working career.

Find information about qualifying and signing up for Medicare.

Review topics to consider if youâ€™re 55 or older and thinking about retiring.

Read general information about Social Security.

Apply online for retirement and disability benefits.

Access a printable version of your Social Security Statement.

To create your online account, go to Get Your Social Security Statement Online and follow the directions. You must have a valid email address, Social Security number, U.S. mailing address and be at least age 18.

Youâ€™ll need to verify your identity by providing personal information (birth date, Social Security number, current address, etc.) and answering several questions whose answers only you should know. Social Security contracts with credit bureau Experian to design these questions based on their records about your credit history.

Once your identity has been verified, you can create a password-protected account. Social Security emphasizes that you may sign into or create an account to access only your own information. Unauthorized use could subject you to criminal and/or civil penalties.

Itâ€™s important to review your Social Security statement at least annually to ensure your on-file information is correct. For example, make sure that your taxable earnings have been reported correctly by your employer â€“ or you, if self-employed. Otherwise, when Social Security calculates your benefits at retirement, disability or death, you could be shortchanged; or, if your earnings were over-reported, you could end up owing the government money.

If you spot any errors, contact Social Security at 800-772-1213, or visit your local office. Youâ€™ll need copies of your W-2 form or tax return for any impacted years.

To see how these mistakes can add up, hereâ€™s a brief primer on how Social Security benefits are calculated:

When you work and pay Social Security taxes, you earn up to four â€œcreditsâ€ per year. In 2012, you must earn at least $1,130 in taxable wages to amass one credit. Typically you need at least 40 credits to qualify for a retirement benefit; however, those who havenâ€™t earned enough credits might qualify for a benefit based on their spouseâ€™s work record.

Your retirement benefit is calculated based on earnings during 40 years of work. Your five lowest-earning years are dropped from the equation; plus, each year not worked counts as a zero. Itâ€™s easy to see how years of underreported earnings could significantly impact your ultimate retirement benefit amount.

Social Security â€œfull retirement ageâ€ increases gradually from 65 for those born before 1938 to 67 for those born after 1959. To calculate your own full retirement age, use this calculator from Social Security.

If you meet eligibility requirements, you may begin drawing reduced benefits after reaching age 62; however, doing so may reduce your benefit by up to 30 percent. The percentage reduction gradually lessens the closer you approach full retirement age. Alternatively, if you postpone collecting your benefit until after reaching full retirement age, your benefit will increase by 7 to 8 percent per year, up to age 70.

Other benefits based on your Social Security tax payments may also be available to your spouse and children under certain circumstances, such as if you become disabled or die. For a more complete discussion, see my previous blog, Social Security Looms for Baby Boomers.

Another valuable piece of information found in your Social Security Statement is an estimate of what your retirement benefit will be at age 62, at full retirement age and at age 70. Use those numbers to launch a long-term retirement strategy. Several handy calculators are available, including:

Social Securityâ€™s Retirement Estimator, which automatically enters your earnings information from its records to estimate your projected benefits under different scenarios, such as age at retirement, future earnings projections, etc. You can also download a more detailed calculator to make more precise estimates.

AARP has a calculator to help estimate your Social Security benefit and determine the best time to claim it. They also provide a retirement calculator to help determine your current financial status and what youâ€™ll need to save to meet your retirement needs.

Bottom line: Make sure you know what Social Security benefits will be available to you and how much more youâ€™ll need to save in order to have a comfortable retirement.

ThisÂ article is intended to provide general information and should not be considered legal, taxÂ or financial advice. It’sÂ always a good idea to consult a legal, taxÂ or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.